The end of the earnings season is always a good time to take a step back and see who shined (and who not so much). Let’s take a look at how sales software stocks fared in Q2, starting with ZoomInfo (NASDAQ:ZI).
Companies need to be able to interact with and sell to their customers as efficiently as possible. This reality coupled with the ongoing migration of enterprises to the cloud drives demand for cloud-based customer relationship management (CRM) software that integrates data analytics with sales and marketing functions.
The 4 sales software stocks we track reported a mixed Q2. As a group, revenues were in line with analysts’ consensus estimates while next quarter’s revenue guidance was 1.2% below.
Thankfully, share prices of the companies have been resilient as they are up 8.3% on average since the latest earnings results.
Weakest Q2: ZoomInfo (NASDAQ:ZI)
Founded in 2007 as DiscoveryOrg and renamed after a merger in 2019, ZoomInfo (NASDAQ:ZI) is a software as a service product that provides sales departments with access to a database of prospective clients.
ZoomInfo reported revenues of $291.5 million, down 5.5% year on year. This print fell short of analysts’ expectations by 5.3%. Overall, it was a softer quarter for the company with underwhelming revenue guidance for the next quarter and a miss of analysts’ EBITDA estimates.
“In the second quarter, we implemented a number of initiatives to position the company for long-term success,” said Henry Schuck, ZoomInfo founder and CEO.
ZoomInfo delivered the weakest performance against analyst estimates, slowest revenue growth, and weakest full-year guidance update of the whole group. The company added 37 enterprise customers paying more than $100,000 annually to reach a total of 1,797. Interestingly, the stock is up 10.3% since reporting and currently trades at $10.83.
Read our full report on ZoomInfo here, it’s free.
Best Q2: Freshworks (NASDAQ:FRSH)
Founded in Chennai, India in 2010 with the idea of creating a “fresh” helpdesk product, Freshworks (NASDAQ: FRSH) offers a broad range of software targeted at small and medium-sized businesses.
Freshworks reported revenues of $174.1 million, up 20% year on year, outperforming analysts’ expectations by 3%. The business had a very strong quarter with accelerating growth in large customers and an impressive beat of analysts’ EBITDA estimates.
Freshworks scored the biggest analyst estimates beat and highest full-year guidance raise among its peers. The company added 1,195 enterprise customers paying more than $5,000 annually to reach a total of 21,744. Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 11.1% since reporting. It currently trades at $11.81.
Is now the time to buy Freshworks? Access our full analysis of the earnings results here, it’s free.
Salesforce (NYSE:CRM)
Launched in 1999 from a rented one-bedroom apartment in San Francisco by Marc Benioff and his three co-founders, Salesforce (NYSE:CRM) is a software-as-a-service platform that helps companies access, manage, and share sales information.
Salesforce reported revenues of $9.33 billion, up 8.4% year on year, in line with analysts’ expectations. Still, it was a a satisfactory quarter as it posted an impressive beat of analysts’ EBITDA estimates.
Interestingly, the stock is up 13.5% since the results and currently trades at $294.06.
Read our full analysis of Salesforce’s results here.
HubSpot (NYSE:HUBS)
Started in 2006 by two MIT grad students, HubSpot (NYSE:HUBS) is a software-as-a-service platform that helps small and medium-sized businesses market themselves, sell, and get found on the internet.
HubSpot reported revenues of $637.2 million, up 20.4% year on year. This print surpassed analysts’ expectations by 2.9%. It was a strong quarter as it also produced an impressive beat of analysts’ EBITDA estimates and a decent beat of analysts’ billings estimates.
HubSpot pulled off the fastest revenue growth among its peers. The company added 11,214 customers to reach a total of 228,054. The stock is up 21.1% since reporting and currently trades at $558.
Read our full, actionable report on HubSpot here, it’s free.
Market Update
The Fed cut its policy rate by 50bps (half a percent) in September 2024, the first in roughly four years. This marks the end of its most pointed inflation-busting campaign since the 1980s. While CPI (inflation) readings have been supportive lately, employment measures have bordered on worrisome. The markets will be assessing whether this rate cut's timing (and more potential ones in 2024 and 2025) is ideal for supporting the economy or a bit too late for a macro that has already cooled too much.
Want to invest in winners with rock-solid fundamentals? Check out our Top 6 Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
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